Bill requiring Sequoia, Kleiner Perkins fund disclosures passes California Senate

The California Senate on Monday approved a bill that requires the University of California to release performance data for funds from Sequoia Capital and Kleiner Perkins Caufield & Byers, two of the industry’s most secretive firms.

The bill now goes to the state Assembly, where it must win approval, before being sent to the governor for his signature.

The University of California owns 10 Sequoia and Kleiner Perkins funds, according to a recent public portfolio report.

UC has not released updated performance data for seven of the funds since 2003 and has not supplied data other than capital commitments for three additional Sequoia funds since the investments were made in 2010, 2011 and 2012. The funds are the only ones in the UC private equity portfolio for which the university does not provide current performance information.

A California state law adopted in 2003 requires high level performance information on private equity investments where public money is involved including distributions and IRRs. The new Senate bill, SB 574, requires the university to obtain the information, which it says it doesn’t presently have.

The bill was introduced by Sen. Richard Pan, D-Sacramento, and is sponsored by the California Newspaper Publishers Association.

In a letter to the Senate education committee, the university objected to the bill, saying that obtaining information “not critical to its investment decisions is illogical and could result in the university being prohibited from participating in certain types of investments.”

The letter also claims “UC believes this bill will create a strong possibility that the university would become embroiled in expensive litigation to obtain noncritical investment information sought by the sponsors of this bill.” The university only receives aggregate performance information for the funds as a group.

“Students, faculty and thousands of public employees who depend on the success of UC investments deserve the have this information and the UC system should want it, too,” Pan said in a statement.

Reuters America, a unit of peHUB’s former parent company Thomson Reuters, took the university to court in 2012 seeking the information, but an appeals court rejected the request. Earlier a trial court had sided with Reuters and said the university should obtain and disclose performance information on the funds.

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